January 28, 2010

I have been witnessing the rise of my country with industrialization and significant economic development year by year throughout my childhood, the rapidity of which would have been unimaginable for people living on the same land a hundred years, fifty years, or even just twenty years ago. Yes, lucky I am born in this golden age, and in one of world’s most gigantic metropolises and the capital of a nation with a five-thousand-year history and gradually catching the eyes of the world with its undeniable consequences over international matters, and even luckier I am that I have been thinking of the reasons for such fast development and the propeller for it to be sustained into the future of our nation, ever since my childhood.

Economics is too abstract an idea for a child to fully comprehend, and of course I was no genius in this. What I could tell of the reasons for our development was by no doubt what I could touch and see around me every day as a child. In those days stores in China had already become abundant of western brands and the television with westernized commercials. Compared with completely hand-made clothes, furniture, and soap made from extractions of animal tissues decades ago, people were now using Colgate and Rejoice in mornings and evenings, having Big Macs for a quick lunch, and some of the wealthier were already driving to work. Although I was not sure how those things were developed and realized, I did know that China could not have relied solely on its own and got all these within just a dozen years – We needed to borrow the technologies from the developed and industrialized world, not from begging, but from mutually beneficial trades and exchanges, enabled by the economy reform started during the years of Deng Xiaoping, as I later learned.

When everyone across China had benefited from market economy, average people began realizing the importance of it and the government knew they will have to keep the market expanding and developing while some defects in many market economies away from China, in order to maximizing the welfare of the people. But how? What the Chinese government knew best was the application of military forces, but not the development of economy, a fact made only clearer by the known impoverished China under a planned economy. We lacked the knowledge needed to develop economy well, which is the very foundation of development of our technology, education and academic research, national defense, international status, and the well-being of our good countrymen and future of our nation. We need dedicated economists alongside politicians to design economic policies that are suitable to our specific conditions. With economics being one of the youngest subjects in the fields of research in most Chinese academic institutions, the scarcity of economic specialists is most obvious.

More than five years ago, when I first became a senior high school student, our teacher asked us to write down our wishes and goals for our study. Never would I ever forget what I have written on a slip torn from my notebook in that summer afternoon: Live for the welfare of the whole human race, and contribute to the development and future of mankind until the last day of my life. I believe by studying economics, I will best dedicate my life to our nation and the world. To realize that dream – an eternal dream of humankind.

Back in junior high, I read Stephen Hawking's A Brief History of Time, and was inspired by his vivid description of this splendid universe we lived in. It opened up the world of philosophy to me. By then I began thinking, why we, as individuals, existed in this world? (Or did we exist at all, which was a epistemological topic I discussed frequently in my high school essays.) If I had never been born, would this world be different in the slightest? If not, why was I still breathing and talking and laughing? Since then, I made my mind that, whatever would I choose as a career, I had to make a difference to this world; I had to leave my trace after I would pass away one day, to make my life meaningful. This also contributed to my aim at becoming an economist, as I believe economics is the study that can make all on this planet better off, to save thousands of people from poverty and diseases, and to leave a heritage to future generations.

January 24, 2010

Actually I don't think President Obama can actually achieve that. Over the past century, countless such regulations intending to limit the activities of the banking sectors were passed by the Senate but none were effective enough to achieve their initial goals (and many have been abandoned since). The problem is that bankers are notorious for innovative ways to combat such regulations - they work about the law and invent new kinds of derivatives or forms of products to bypass the limitations of law. With these reactions, the regulation on the financial industry can at best change bankers' behavior in the very short run - this is merely an inefficiency to the economy which cannot change the future of the banking industry.

Similarly, last week, I heard that the Obama administration is proposing to limit the size of financial agencies, in order to avoid the "too big to fail" problem. I bet it won't work either. You can control the size of each company, but you cannot control who owns these companies. Bankers can easily work around and split one company into several with intimate ties that link them to each other financially.

Basically I have not yet seen any such regulations that truly work, and if one does not work, it becomes mere inefficiency. Some propose the government should deregulate bankers and restrain from bail-outs to teach bankers to be independent in the long run and be responsible for their own behaviors. But this solution is also problematic. After all I still do not know a suitable solution to the asymmetric information concerns in the financial sector. Maybe this is a theme I can work on in the future.

January 23, 2010

Now that China has emerged from the chaos of the economic tsunami, with again close to double-digit growth, the first and only among major economies. Though China’s figures are doubtful in the eyes of the outside world, the Harvard-educated economist Guo Kai claims that, if anything, the true growth figure in China should be even higher. The theory of China dominating the world seems more and more indisputable. But is it true?

First we should understand what has been the compeller of China’s recent growth. The China of the past under planned economy concealed its potentials. With no incentive system and established property right, China was left with an entirely underemployed working force. There were the natural resources; there were the talented mathematicians; but the energy sources and mines were left unexploited and the scientist were either growing rice or grazing cows. No matter you worked or not, everyone was kept almost equally poor under the redistribution system. What development can you expect from such utilization of resources?

After Deng Xiaoping placed China on the road to market economy, everything changed drastically. The previously fettered forces of this potentially huge economy were eventually freed. People finally had a reason to work. Starting from then, people all over the world awed the breathtaking growth of a nation with a population constituting one fifth of that of the world.

It should have come with no surprise at all – after all it was merely that the power of this machine had been artificially hampered, and now it could finally run at full speed. The growth of China was nothing like that of Europe after the Industrial Revolution. The majority of the technology utilized during the growth of China were already there at least half a century ago, given that China’s growth were mainly driven by low-value-added manufacturing of products such as toys and textile, and with such a huge population, even under a comparatively good institution, it took China more than thirty years at least to warm up to function at maximum speed. To sum, the growth of China was not powered by innovation, it was just the sequela of the inefficiencies of the pre- Reform and Opening Up era.

So with the freed work force and the capital accumulated in the past few decades, China should be ready to conduct true innovation, which is the primary way any country can sustain long-term development. But that is not as easy as it may seem. We now know that real growth is motivated by improvement in cutting-edge technology, but this is also the very thing that is difficult to materialize in China.

For example, the cloud computing technology that is gradually becoming the center of attention in the scientific realm requires the collaboration of hundreds of thousands of personal computers across vast geographical areas. Google, among several multinationals centered about information technology, is currently investing heavily in this. However, with the Internet censorship in China, I do not see how cloud computing is ever going to work out in China. (Actually, with the withdrawal of Google China, the prospect of cloud computing in China seems remote at best.)

Another obvious constructive force to development is education and research. Good education is the indication of future growth, and research is the engine to every development at the cutting edge. However, according to personal experience in top high schools in China, and my former classmates in top universities, education in China is still mainly controlled by bureaucratic school officials and rigid military-type school regulations – far from the ideal ground to encourage innovation. In fact, even in the very top universities, students are mostly only allowed to access the “educational sites” on the Internet while on campus. That means not only BBC and Reuters are not available, even the Bureau of Economic Analysis is blocked. I wonder how economics majors there can conduct any meaningful research without all those important sources of data. Also, a significant percentage of those top students in high school, e.g. the former president of our Student Union back then, are now studying and living in the U.S. or other advanced countries. Without these students, who shall shoulder the responsibility to lead China twenty years from now?

We have seen Japan; we have seen Germany. They are excellent examples as successful economies, but they never had a chance to surpass the U.S., let alone taking over the world. Now I heard that free distribution of newspapers in Beijing subway stations are recently banned, while government officials claim that “reading newspapers while on board is not safe for passengers”. With these internal disturbances, I do not see where this country is going.

Here is an unverified story happened in ancient China I heard from a friend, quoted here just for fun: During the Warring States Era, a government official went back to his hometown after three years of duty in the capital. To his dismay, he found his wife pregnant when he arrived. He returned to the capital and sought justice from the King, who told him that it was probably because “his wife loved him so deeply that she got pregnant thousands of miles apart”.

January 21, 2010

This is a letter I wrote to the president of my university, suggesting that students should be allowed to change their study schedule, and undergrads should be allowed to take graduate-level courses.

Dear Prof. Ng

I am a student from the Department of Economics. I am writing to suggest two improvements that could be made to our curriculum system. Since there is only one week left of the Course Add/Drop period, should there be any change made regarding these two suggestions, please kindly inform me so that further amendments to my time table could be carried out timely.

To allow students with legitimate reasons to tailor-make their own study schedule.

Since enrollment in college, I’ve been planning to pursue a career in the academia, for which I have since decided to join a PhD program after graduation. Since nowadays the study of economics is unbelievably mathematics-intensive, major economics graduate programs unanimously require students to take a wide range of math/statistics courses, including calculus, linear algebra, differential equations, real analysis, mathematical statistics etc. Also, since PhD students specialize quickly after enrollment in graduate school, it is also of undeniable importance for students to gain an accurate and deep understanding of what each of the subdisciplines of economics is about. With both these concerns taken into account, our three-year college program for an economics student should already be crowded with these math/stat/econ courses. However, since there are required courses such as those business and management courses, which are only remotely, if at all, related to the study of economics, in our university’s program, students interested in graduate school have to squeeze in as many relevant courses as possible to their schedule while barely meeting the requirement of admission to graduate school.

Here I am not saying that these “irrelevant” courses should be eliminated completely from the economics program – of course there are students who are intending to become business leaders and need the skill taught in these courses – but that since the career plan and thus the needs vary significantly among students, we should not have a strictly unified course arrangement for every student at all; even if there is one, we should allow as much flexibility as possible for students to make extensive adjustments as resources allow. Respecting the personal development of each and every student, helping every individual succeed in her own way – this should be the ultimate goal of the true “Whole Person Education”.

To allow undergraduate students to take postgraduate-level courses.

I once inquired the Academic Registry and the response was: An undergraduate student cannot take postgraduate courses because the level of academic requirement is different. What difference? In terms of the thirst for knowledge and the courage to achieve, there should be no difference between a student taking an undergraduate course and taking a graduate one. In terms of knowledge, I would say no one understands better how much a student knows about a subject than her own. Therefore instead of forbidding undergrads to challenge themselves to take graduate-level courses, the University should support students who are willing to learn and who has the ability to do so – as long as the student can demonstrate good academic standing.

As I said above, for a PhD Economics student, it is important to learn about the different subfields thoroughly before going to graduate school and choose a research area. Specifically, such understanding should best be gained from graduate-level courses instead of undergraduate courses. For one thing, due to the historical course of development of the study of economics, undergraduate-level economics courses differ considerably from graduate-level courses. A graduate field course works much better than an undergraduate course in helping a student learn what it really is like in graduate school. For another thing, how well a student has performed in graduate-level courses is probably the best indicator on which the admission committee can base their decision. Therefore I believe it would benefit students significantly if they are allowed to take graduate-level courses as long as they are in good academic standing, and this would not cause much of a resource-constraint to the University as well, since there should not be many undergraduates interested in taking graduate-level courses.

By catering to the needs of the constantly changing body of students, and the dynamic ideology of the society, we will realize the true “Whole Person Education”. This demands improvements every now and then, which is what our University has done in the past, and should not and will not cease to persist in in the future.

As is generally accepted, it is easier for young people to pick up a language than adults. A reason could be that when people are younger, they do not possess an advanced level of thinking. Therefore the largely simple thinking patterns a child may have can be sufficiently expressed by the basic vocabulary and expressions they have learned in a language. In other words, the language and the mind are “synchronized”. However, things are much more difficult for adults who need professional terminology and sophisticated sentence structures to express accurately their delicate and sometimes philosophical thoughts. With repeated failure and frustration, adults soon give up learning a second language.

January 10, 2010

Okay I should’ve written this by year end, where everybody was summarizing the year that would soon pass. However I’ve been busy back then, and just found the right mood to get down writing something at the end of my winter break.

In this past year of 2009 I read more books than any previous year – that is, counting only non-textbooks and excluding abbreviated versions. I used to defy novels in general and read non-fictions only, but I recently found that novels play their indispensible role in leisure reading.

Over all I read seventeen books, as follows:

Steven D. Levitt and Stephen J. Dubner,FreakonomicsThere are just too many reviews on this marvelous title to behavioral economics. It was from this book I first came to understand what behavioral economics really is, and grew my love for it. Recommended.

Barack Obama,Dreams form My FatherA brilliant memoir. Touching and unforgettable. After reading this, I truly understood why Obama is capable of the presidency of a great nation. Recommended.

Randy Pausch with Jeffrey Zaslow,The Last LectureMemoir from a moribund professor. This book talks about the meanings of life and the importance of realizing one’s dreams. It also teaches the way to face a pending death. Recommended.

Peter Taylor (ed.), A Day Saved and Other Modern StoriesAn interesting little anthology of stories written by famous writers of the 20th century.

Cal Newport,How to Become a Straight-A StudentA fantastic guide to succeeding in college with many useful advices streamlined into a system, some of which I had already used before reading it.

-, How to Win at CollegeAnother guide from the same author. It includes some seventy tips for college students. Better suited for a freshman, since many of those tips need to be worked on since enrollment in college. I’ve written another article about this book.

Paul Krugman,The Conscience of a LiberalFrom the Nobel laureate. I remember the first several chapters are an economic history of U.S. with detailed interpretation. Later the author gives solutions to the economic problems as in 2005, including the universal health care. Recommended for people interested in the U.S. economy or medical economics.

David Colander,The Making of an Economist, ReduxIf you are thinking about getting a PhD economics, and you have not read this book, you should read it. From it I learned what grad school in economics is really like.

David Packard, The HP WayI found it on a bookshelf in my father’s study. It is written by the cofounder of the Hewlett-Packard company (HP), and tells the story of how they turned a workshop in a garage to become the biggest PC maker in the world.

Roger E. Backhouse, The Penguin History of EconomicsThe author is obviously knowledgeable on the subject, and I did learn a lot about how my field of study evolved since pre-Plato eras. I would admit that it is a little boring to read, with relatively plain language and structure. Probably there are more enjoyable titles on the topic.

Haolan Ma (ed.), American LiteratureClaimed to be selected from high school literature textbooks used in the United States. Poorly edited, with spelling errors every now and then. Though the articles included are all truly gorgeous.

Walt Whitman, Leaves of GrassThis is my first encounter with poetry written in English. Actually I do not like reading (near) modern poetry that much. And for classical poetry, I only enjoy them when reciting out loud. Despite these, Whitman’s Leaves was amazing in how he embraced progressive ideology (some can even be considered progressive today).

Yutang Lin, My Country and My PeopleDr. Lin’s book on China was almost defining when it was first published in 1935 in America, soon becoming a bestseller. Its description of China and the people of China are accurate and vivid. Though the majority of the books may be obvious to a college student from China, it probably still retains its charm to a Western mind.

Charles F. Haanel, The Master Key SystemThe grandfather of all modern self-help success books. Somewhat too abstruse, probably due to age. Since I’ve read quite a few similar books when in junior high school, not many ideas came fresh to me.

Anthony Bozza, Whatever You Say I AmA biography of the rapper Eminem I bought in the Heathrow Airport of London way back in high school. I've started to read it ever since and have just finish last summer. Besides a biography, it also includes a history of hip-hop culture.

Best Nonfiction This Year

Tim Harford, The Undercover EconomistHarford is inborn with an economist’s mind. The Under Cover Economist covers topics from behavioral economics, pricing strategies, monetary economics, asymmetric information, development, international trade, and more. He explains each topic with easy-to-understand and real-life examples that help an economics lay-person to understand and apply in everyday thinking. If you are a student of economics, this book will give you more interesting examples of what you learned in Principles; if you are not familiar with the study of economics, this book tells you what it is and how economics can help achieve what you desire.

Best Novel This Year

Bernhard Schlink, The ReaderMy Aunt recommended it to me. When I first started to read it, I thought it was just a usual romantic novel. But soon I discovered that it was much more than that. It is a book of war and ethics, of sin and redemption.